Nasdaq Slump Deepens; Dow Rallies For 8th Week

Published August 1, 2011

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Wall Street reached this week’s finish line with a decidedly mixed picture as Google helped extend the Nasdaq’s slump to three days, but General Electric’s bullish results carried the blue chips to new two-year highs and to their eighth-straight weekly rally.

Today's Markets

The Dow Jones Industrial Average rose 49.04 points, or 0.41%, to 11871.84, the Standard & Poor's 500 advanced 3.09 points, or 0.24%, to 1283.35 and the Nasdaq Composite declined 14.75 points, or 0.55%, to 2689.54. The FOX 50 gained 2.98 points, or 0.32%, to 921.02.

Without any major economic indicators to move the needle, most of the focus was on the varying reactions to the latest quarterly reports as General Electric (NYSE:GE) surged 7%, but Google (NASDAQ:GOOG) slipped 1% amid concerns with its management shakeup.

“It’s a disappointment the technology sector couldn’t get a bigger lift” from the solid earnings reports, said Nick Kalivas, vice president of financial research. “A lot of it boils down to the fact a lot of good news has been built into the market.”

Kalivas was alluding to the Nasdaq's surge of more than 100% since March 2009 that left the index as recently as Tuesday in territory unseen since November 2007. Still, the Nasdaq's three-day slump has erased more than 2.5% from the index, marking one of its biggest slumps in months.

On the other hand, the Dow racked up its eighth consecutive weekly gain, the longest such streak since April 2010. The benchmark index was led higher by GE and American Express (NYSE:AXP), while its weakest links were Alcoa (NYSE:AA) and Bank of America (NYSE:WMT).

The Nasdaq closed solidly lower, dragged down as Google closed in the red even after posting a stronger-than-expected fourth-quarter non-GAAP profit of $8.75 on revenue of $6.37 billion. The beat was overshadowed as Google shocked the industry by announcing the replacement of CEO Eric Schmidt with co-founder Larry Page. Schmidt plans to stay on as executive chairman.

Contrasting the Google news, blue-chip conglomerate GE leaped 7% after beating the Street with a fourth-quarter profit from continuing operating 36 cents a share, compared with consensus calls for 32 cents. GE also said its revenue unexpectedly climbed by 1% to $4.14 billion.

Bank of America (NYSE:BA) slid 2% after revealing a second-straight quarterly loss amid heavy writedowns and a deeper-than-expected revenue decline of 11% to $22.7 billion. It's been a mixed earnings season for the financial sector as Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) missed estimates, but JPMorgan Chase (NYSE:JPM) and Morgan Stanley (NYSE:MS) beat the Street.

Wall Street and the commodities complex struggled to rally around the euro, which hit a two-month high by surging 1.05% to $1.3613.

Despite the weaker dollar, crude oil capped off its worst week since November by sinking 48 cents a barrel, or 0.54%, to $89.11. Gold continued its ugly January, declining $5.50 a troy ounce, or 0.41%, to $1,341 -- its lowest close since November 17.

Corporate Movers

Warner Music Group (NYSE:WMG) surged 27% after The Wall Street Journal reported it is mulling accepting a buyout or breaking up its businesses even as it continues its pursuit of rival EMI. Warner, the No. 3 global music company, hired Goldman Sachs (NYSE:GS) to help it evaluate its options. A sale of parts of its businesses could help it more easily acquire EMI, the No. 4 recorded-music company, the paper reported.

Pep Boys (NYSE:PBY) soared nearly 15% to 10-year highs after Bloomberg News reported the company is exploring a possible sale via Bank of America (NYSE:BAC). The auto-parts retailer is trying to drum up interest among private-equity firms such as Leonard Green & Partners, Bain Capital and TPG Capital, the news agency reported.

Hewlett-Packard(NYSE:HPQ) announced the resignation of four board members in a board shakeup in the wake of the controversial ouster of ex-CEO Mark Hurd. The board is adding five members, including former eBay (NADAQ:EBAY) CEO Meg Whitman, bringing its total members to 13.

Advanced Micro Devices (NYSE:AMD) slumped 6% even after beating the Street with a non-GAAP profit of 14 cents a share last quarter on $1.65 billion in sales. The chip maker had been expected to earn 11 cents a share on $1.63 billion in revenue.